Rural Distress: A Regular Unconditional Basic Income Ideal For India, Says Varun Gandhi

BJP MP Varun Gandhi has recently come out with a book on farm distress, A Rural Manifesto, wherein he talks about the problems plaguing rural India. In an interview with BW Businessworld’s Suman K Jha, the young MP talks about possible solutions to the crisis.

Excerpts:

Why is agrarian distress such a recurring theme in India?

Rural distress, in fundamental terms, remains more of a continual issue than a recurring one. Throughout my travels to the Indian rural hinterland across the nation, one could sense that the existence of a village, largely dependent on agriculture, remains fragmented along delicate faultlines, often a result of large scale structural weakness in our agricultural edifice.

At a granular level, marginal farming in India is a highly complex and decision-intensive process. The farmers have to make a variety of decisions starting from his choice of crops (annual or short term) and their time of tillage. The challenge is further exacerbated with rising prices of agricultural inputs, soil suitability and pest management. Compound these uncertainties, with unavailability of water, improper access to clean energy, lack of timely & affordable credit and inadequate marketing reforms and we get a cornucopia of factors responsible for agrarian distress.  

Even in historical times and especially during Colonial times, land revenue based systems meant that the farmer remained subjected to extortionist and whimsical cesses, leading to their steady pauperization. Even colonial officers have observed that the “The Indian peasant is born in debt, lives in debt and dies in debt.” (Malcolm Darling, 1925)

Our policy apathy and inefficiency to repair the faultlines impacting our villages, and especially agriculture, also contributes to agrarian distress. Post 1991, agriculture has grown at 1% on average, while industry has grown at 8%. This has led many farmers to leave farming and seek employment in towns and cities.

Why has farm distress failed to capture the attention of policymakers (Of all hues)?

Despite the fact our policymakers have historically prioritized fostering urban investments, one cannot generalize to say that farm distress has failed to attract policymakers’ attention.

With marginal farming proving uneconomic and almost 72% of India’s farmers being small or marginal in nature, rural distress remains a subject matter of immense policy interest and a big electorate issue at large, which gets increasingly more important as awareness in rural India increases manifold, helped generously by the information revolution. However, we also need to keep in mind that farmers historically do not vote in a block. Personal identity is not a monolith, but a complex dissemination of various factors and thus remains subject to caste and religious considerations.

Why do we arrive at kneejerk solutions like farm loan waivers? Is farm loan waiver really a solution to the farmer's woes?

Farm loan waiver is essentially an emergency measure rather than a kneejerk reaction to agrarian distress – it remains a short term, stop-gap arrangement till credit culture improves alongside rising farmer incomes. Let us consider few figures – indebted farm households have increased from 25 percent in 1992 to 52 per cent in 2016. The average debt of an agricultural household stands at Rs 1.04 lakh, whereas the average monthly income stands at Rs 8,900 – thus, average debt is roughly their annual income. Nearly 70% of India’s estimated 90 million agricultural households end up spending more than their earnings, thereby being caught in a spiral of ever-increasing debt. In such times of economic desperation, a farm loan waiver is needed to provide immediate relief.

However, our long term focus should be on improving and sustaining farmer incomes.

In order to counter farmer’s woes of rural indebtness, what we really need is freedom from indebtness for our farmers.

To manage indebtness at primary stage, State level Debt Relief Commissions need to be established and strengthened. The commission should be able to waive off a percentage of the debts, while declaring a general moratorium on debt repayments or declaring an area as distress affected if need arises, which would then seek waiving of farm loans (including private loans from moneylenders), while ensuring access for farmers in the most remote areas as well. Herein, the Kerala State debt Relief Commission sets a good precedent.

Aside from farm loan waivers, which remain necessary, there are other ways to mitigate their plight.

 Firstly, we need to reduce input prices by providing greater subsidies directly to farmers – this could be extended on the purchase of agricultural equipment, fertilizers and pesticides. In times of marginal economic existence, any unforeseen expense on healthcare can be catastrophic – an estimated 39 million people fall below the poverty line trying to avail of healthcare in our hospitals and clinics. They could be provided insurance coverage through the AB-NHPS scheme, including outpatient costs. Encouraging contract farming, use of waterways for transport of produce, increased processing capacities, and enhanced Govt. procurement shall help in increasing farm gate realizations. In addition, the scope of MNREGA could be increased, allowing marginal farmers to be paid for tilling their own fields could reduce their input costs – they can’t afford other agricultural labourers and find it socially awkward to till someone else’s field. MNREGA benefits can also be extended to include a higher number of guaranteed employment days, besides ensuring timely payments.

These steps can have a positive impact on farmer incomes, which shall play a huge role in freedom from indebtness.

Do you think if the Swaminathan Commission's recommendations are implemented in toto, it will make the farmers' lot a lot better?

 The recommendations made by the Swaminathan Commission from 2004 – 2006 over five reports makes for an interesting and comprehensive read on faster and inclusive farm growth. The land reforms suggested make an attempt to tackle the issue of smaller landholdings, besides giving tillers the right to land, which makes them eligible for a variety of incremental benefits extended to landowners. The proposed National Land Use Advisory Service, would empower the farmers to improve land usage based on ecological, meteorological and marketing data.

Sustained access to clean water is a huge problem faced by our farmers today – with increased groundwater extraction, an indicator of inefficiency in making irrigation available to all, we remain a water stressed society (nearly 30% of our talukas are in semi-critical, critical or overexploited categories). The recommendations pertaining to irrigation, particularly on ensuring water supply through rainwater harvesting and water level recharging will help curtail groundwater extraction while recharging our aquifers. It calls for increased agri-investments (particularly in irrigation, water conservation & road connectivity) which shall help boost productivity.  Expanding formal credit outreach shall expedite delivery of benefits easier and faster, while its other recommendations of moratorium on debt recovery, increased MSP (over C2 cost) & crop insurance with village as unit of measurement will protect the farmers against volatilities in their farm incomes.

To summarize, effective implementation of its recommendations shall contribute positively to the farmers’ lot.

What additional measures do we need to have for making the Indian farmer prosperous?

Apart from the measures stated above, we also need to explore the Rythu Bandhu scheme implemented in Telangana, wherein each farmer can receive a certain allowance basis their landholding (on a per-hectare basis), capped at a certain maximum amount. Even a cap of 2 hecatres shall mean that 87% of agricultural households shall get benefitted (whereas 67% of agricultural households hold less than 1 Hectares of land).

We should encourage self-help groups, which inculcate a banking habit, while creating a safe avenue for functioning like a small bank, lending money to members. This could further be useful to implement a regular unconditional basic income, scaled up through pilots, and rolled out slowly and carefully.

Pilot studies have been conducted on universal basic income in India. A pilot in eight villages in Madhya Pradesh provided over 6000 individuals a monthly payment (Rs 100 for a child, Rs 200 for an adult; later raised to Rs 150 and Rs 300 respectively; Guy Standing, 2014). The money was initially paid out as cash, while transitioning to bank accounts three months later. The transfer was unconditional, save the prevention of substitution of food subsidies for cash grants. The results were intriguing. Most villagers used the money on household improvements (latrines, walls, roofs) while taking precautions against malaria – 24.3% of the households changed their main source of energy for cooking or lighting; 16% of households had made changes to their toilet. 

Thus, a regular unconditional basic income, scaled up through pilots, and rolled out slowly and carefully, seems ideal for India.